JOHANNESBURG (miningweekly.com) – AngloGold Ashanti chairperson and former South African Reserve Bank governor and Cabinet Minister, Tito Mboweni, has slammed the “sledgehammer” approach of the Department of Mineral Resources (DMR) to mine safety and spoke of a current tendency to “regulate the industry to death”.
In an unscheduled short verbal intervention during question time at AngloGold’s presentation of record $1.3-billion 2011 profit and letting it be known that he was not asking a question, Mboweni said that the authorities should not only be playing the role of regulator, but should also be playing the role of partner in economic development.
“It’s important that the DMR doesn’t just see its role as coming with a sledgehammer all the time,” he said.
Instead, he urged that it position itself as a developmental partner, against the background of government’s stated commitment to South Africa achieving higher levels of productivity and economic growth.
“From time to time I get the sense of a tendency to regulate the industry to death instead of regulating it in order to improve productivity and economic development,” said Mboweni.
He urged the DMR to differentiate between the failure of management to follow guidelines and fatalities.
In the case of fatalities, companies accepted that there had to be stoppages, but in the case of minor infringements, management was able to take care of situations itself.
He reminded the DMR that the unlocking of the potential of the mining industry was one of government’s key objectives, and that the unlocking could only be done through partnership.
He spoke spontaneously after analysts had peppered AngloGold CEO Mark Cutifani with several questions on the spate of government-enforced mine stoppages that had resulted in thousands of precious metal ounces being lost, the majority of them without any link whatsoever to fatalities.
Earlier this week, Anglo American Platinum (Amplats) CEO Neville Nicolau reported that Amplats had lost 109 000 oz of platinum as a result of Section 54 without any fatality having taken place.
Cutifani estimated to Mining Weeky Online that more than half of the 73 000 oz that AngloGold had lost in the last 12 months were nonfatal ounces.
Cutifani’s concern centred on new safety hazards being created when deep underground mines were stopped for several days.
“When you stand an operation for five days, you are creating new safety hazards that in certain cases are well in excess of the hazard that you are trying to correct.
“We have to do better in our dialogue with the DMR and work those issues through so that we’re not creating hazards that are in fact worse than the Section 54 stoppage we are trying to correct, because my first objective is safety of everyone that works underground and everyone in the management team shares that view,” Cutifani said in response to questioning from JP Morgan mining analyst, Allan Cooke.
In response to BNP Cadiz mining analyst Adrian Hammond, Cutifani said that, whereas in the past, working areas were stopped for a safety correction to take place in that specific area, full mines were now being shut down.
“That’s the issue that concerns us,” Cutifani said.
He cited by way of example substandard railway sleepers in a particular area of the track resulting in an entire mine being stopped for the inspection of a complete track system.
“You are then stopping 15 working faces at 2 500 m depth for three or four days to address a very localised hazard. For us, that needs to be rethought. A local approach is more appropriate and more of a standard across the world,” Cutifani added.
AngloGold’s 2012 production guidance of 4.3-million ounces to 4.4-million ounces faced downside risk as a result of the safety-stoppage issue, AngloGold CFO Srinivasan Venkatakrishnan noted.